I believe that the House is united in its concern for those who struggle to manage their food bills. That is as it should be. However, this debate has laid bare the absence of any ideas from the Opposition. That is in marked contrast to the practical steps that the coalition is taking to help hard-pressed families up and down the country. On that basis, the motion should be rejected.

Question put,

T

he House divided:

Ayes 223, Noes 293.

Division No. 435]

[6.58 pm

AYES

Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Ali, Rushanara

Allen, Mr Graham

Ashworth, Jonathan

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Barron, rh Mr Kevin

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Bell, Sir Stuart

Benn, rh Hilary

Berger, Luciana

Blackman-Woods, Roberta

Blears, rh Hazel

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Burden, Richard

Burnham, rh Andy

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Chapman, Mrs Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Cooper, Rosie

Corbyn, Jeremy

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Tony

Curran, Margaret

Darling, rh Mr Alistair

David, Mr Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Jowell, rh Tessa

Joyce, Eric

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Ian

Mactaggart, Fiona

Mahmood, Mr Khalid

Malhotra, Seema

Marsden, Mr Gordon

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonagh, Siobhain

McDonnell, John

McFadden, rh Mr Pat

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Michael, rh Alun

Miliband, rh David

Miliband, rh Edward

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Mudie, Mr George

Murphy, rh Mr Jim

Murray, Ian

Nandy, Lisa

O'Donnell, Fiona

Onwurah, Chi

Owen, Albert

Pearce, Teresa

Perkins, Toby

Pound, Stephen

Raynsford, rh Mr Nick

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Seabeck, Alison

Sharma, Mr Virendra

Sheerman, Mr Barry

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Woodcock, John

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Yvonne Fovargue and

Nic Dakin

NOES

Adams, Nigel

Aldous, Peter

Alexander, rh Danny

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Steve

Baldwin, Harriett

Barclay, Stephen

Barker, Gregory

Baron, Mr John

Barwell, Gavin

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Birtwistle, Gordon

Blackwood, Nicola

Blunt, Mr Crispin

Bone, Mr Peter

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Bruce, rh Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, Paul

Burt, Alistair

Byles, Dan

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Chishti, Rehman

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, Mr Edward

Davies, David T. C.

(Monmouth)

Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fullbrook, Lorraine

Fuller, Richard

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Green, Damian

Greening, rh Justine

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, Stephen

Hancock, Matthew

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Harvey, Nick

Haselhurst, rh Sir Alan

Hayes, Mr John

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Mr Gerald

Howell, John

Hughes, rh Simon

Huhne, rh Chris

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lancaster, Mark

Lansley, rh Mr Andrew

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Lilley, rh Mr Peter

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

May, rh Mrs Theresa

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Mensch, Louise

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morris, Anne Marie

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Mr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Parish, Neil

Patel, Priti

Penning, Mike

Penrose, John

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robertson, Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Ruffley, Mr David

Russell, Sir Bob

Sanders, Mr Adrian

Scott, Mr Lee

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Mr Richard

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Stunell, Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Syms, Mr Robert

Tapsell, rh Sir Peter

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Robin

Ward, Mr David

Watkinson, Angela

Weatherley, Mike

Wharton, James

White, Chris

Whittaker, Craig

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Stephen

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Greg Hands and

Mark Hunter

Question accordingly negatived.

23 Jan 2012 : Column 83

23 Jan 2012 : Column 84

23 Jan 2012 : Column 85

23 Jan 2012 : Column 86

Youth Unemployment and Bank Bonuses

Mr Deputy Speaker (Mr Nigel Evans):
Before I call the first speaker, may I say to both Front Benchers that a large number of Back Benchers have signified that they wish to take part in the debate? I ask them for some time constraint in their opening speeches to allow as many Back Benchers as possible an opportunity to speak.

7.13 pm

Rachel Reeves (Leeds West) (Lab):
I beg to move,

That this House notes with concern that unemployment has risen to its highest level for 17 years, youth unemployment has now reached a record level of 1.04 million and the number of young people claiming jobseeker’s allowance for over six months has more than doubled since January 2011; believes that cutting spending and raising taxes too far and too fast has choked off the recovery and pushed up unemployment and that it was a mistake for the Government to abolish the Future Jobs Fund; recognises that rising unemployment and the Government’s failing welfare to work programmes are leading to a higher benefits bill, which is contributing to the £158 billion of additional borrowing announced in the Autumn Statement; further notes reports that multi-million pound bank bonuses are set to be paid out this year, even in banks where the share price has almost halved; and in view of the most recent figures on unemployment, calls on the Government to take urgent action to kickstart the economy to promote jobs and growth and to reconsider its refusal to introduce a tax on bankers’ bonuses this year, in addition to the permanent bank levy, to fund 100,000 jobs for young people.

We have called the debate to raise the alarm on a crisis that is now on the verge of becoming a national disgrace—the disgrace of a few getting rewarded for failure while many more pay the heavy cost of the failure of the Government’s economic policies. However, the motion is not just a critique. It is also a call for action, a reminder to the Government that, despite the damage that has already been done, they still have a choice. There is an alternative—Labour’s five-point plan for jobs and growth could get people back into work, get our economy moving and get the deficit down in a balanced and sustainable way.

Every hon. Member who is present will have met victims of the unemployment crisis in their own constituency. They are families devastated by the arrival of the dreaded redundancy letter and afraid of what the future will bring, and parents determined to do the right thing and provide for their children but unable to make ends meet.

Matthew Hancock (West Suffolk) (Con):
The hon. Lady mentions unemployment in Members’ constituencies. Does she recognise that, based on the claimant count, unemployment in Leeds West has fallen by 106 since the election? Which of the Government’s policies would she recommend as being to blame for that?

Rachel Reeves:
Youth unemployment in my constituency, like in most of our constituencies, is rising fast, whereas it was falling at the time of the last election.

Nadhim Zahawi (Stratford-on-Avon) (Con):
May I share with the hon. Lady the figures for her own constituency? Youth unemployment rose by 625 between 2005 and 2010, which was a 103% rise, yet rose by 25 between 2010 and 2011, which was a 2% rise. Can she explain why it rose so much between 2005 and 2010?

23 Jan 2012 : Column 87

Rachel Reeves:
The hon. Gentleman might be aware of the global financial crisis that took place. Between 1997 and the start of the financial crisis, unemployment and youth unemployment were falling in my constituency and nationally, and at the time of the last general election unemployment was falling. Now, it is rising.

Government Members are in denial about what is happening. The reality is that, over the past year, long- term youth unemployment has more than doubled. It is a reality that the Opposition recognise and would do something about, whereas Government Members ignore it.

Toby Perkins (Chesterfield) (Lab):
Is it not clear that what we have heard in the first moment or two of this debate is Conservative Members saying, “It’s all right, everything’s going great”? We have record youth unemployment, and all we hear from Government Members is laughter and complacency.

Rachel Reeves:
I think many of our constituents watching this debate will say exactly that. The Government are in denial. Youth unemployment is at a record high, and Government Members say, “There’s not a problem. We don’t need to do anything about it. Everything is fine.” That is not the reality for our constituents.

Mr David Winnick (Walsall North) (Lab):
Even if this is a laughing matter for the Government, it certainly is not for us. My constituency has among the highest levels of youth unemployment. It is a tragedy—there is no other way to describe it—when young people are simply unable to find work. I have been in touch with Jobcentre Plus, and there is no doubt about the difficulties and hardships for such young people. Yet for the Government, it is a laughing matter.

Rachel Reeves:
My hon. Friend speaks for the many families and young people in all our constituencies who are experiencing a crisis, and I give him credit for recognising their challenges.

Andrea Leadsom (South Northamptonshire) (Con):
Does the hon. Lady feel at all positive about the Government’s steps to create new apprenticeships for young people to get them into real jobs that will endure?

Rachel Reeves:
The reality is that the Office for Budget Responsibility has examined all the Government’s plans and predicts that unemployment will continue to rise all the way through this year, and the OECD predicts that it will rise next year as well. That is their verdict on the Government’s economic policy.

Several hon. Membersrose—

Rachel Reeves:
I will make a little progress, because we know that many Members want to speak. I will try to give way again later.

Although many of our constituents are very fearful about the future, not everyone is looking to the future with fear and trepidation—not for all the question of how their money will last until the end of the month, or whether they can afford to heat their homes and eat three meals a day. For the past week, we have been hearing stories of banks preparing to pay bonuses to a

23 Jan 2012 : Column 88

few hundred senior employees amounting to hundreds of thousands, even millions of pounds in another multi-billion pound bonus season.

The Opposition believe in rewarding hard work and encouraging enterprise that contributes to the prosperity of the economy, but this is about fairness, responsibility and proportion. It is about the difference between rewards for success and rewards for failure.

When millions of families are struggling to find work, businesses are having their loan applications turned down and banks are continuing to rely on taxpayers’ hard-earned money for their very survival, the vast majority of people in all our constituencies find the idea of such sums being paid to a small number of individuals unacceptable. People rightly feel that we did not bail out the banking system to perpetuate a business-as-usual model or to pay big bonuses when ordinary workers are losing jobs. Surely we bailed out the banks to protect the businesses and families that depend on banks serving and supporting the wider economy.

Mr John Redwood (Wokingham) (Con):
Will the hon. Lady explain why Labour Ministers accepted and approved such grotesque contracts for RBS, so that they now personify payment for failure?

Rachel Reeves:
We introduced a bank bonus tax to get some money back from the banks. The Government refused to go ahead with it and, instead, gave the banks a tax cut this year. That is not acceptable, and that is what the motion is about.

While banks seemingly return to the business-as-usual model, aided and abetted by the current Government, last week the Office for National Statistics published another set of dreadful unemployment numbers. Total unemployment is now at its highest since the summer of 1994. Women’s unemployment is the highest it has been since autumn 1987. Youth unemployment is now the highest since comparable records began. The number of young people claiming jobseeker’s allowance for six months or more has doubled in just 12 months.

Those figures on their own are shocking enough and should be sufficient to end all debate and drive the Chief Secretary and the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), to urgent action. However, most worrying is the fact that, on every measure, and according to every forecast and to the Government’s Office for Budget Responsibility, unemployment is set not to fall, but to get worse.

The Office for Budget Responsibility’s projection, alongside last year’s autumn statement, showed unemployment rising to 2.8 million this year. The OECD expects unemployment to rise to 9% in 2013. If unemployment continues to rise at the rate that it has done in the past six months, it will reach 3 million this summer. The economy may well be headed back to recession—we will hear the grim reality on Wednesday.

However, it is clear that, although the situation is now perilously close to tipping point, and the Government’s failures are mounting, they could still take action. Yet since taking office in 2010, the backfiring of their attempts to cut too far and too fast has added a shocking £158 billion in extra borrowing.

23 Jan 2012 : Column 89

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op):
Does my hon. Friend agree that the growing trend of extended unemployment—more than six months—for young people creates the real worry that we will have a lost generation unless the Government act?

Rachel Reeves:
My hon. Friend is right that long-term youth unemployment has a scarring effect, which affects more and more people throughout the country. It is similar to the situation in the early 1980s and early 1990s—the last two times a Conservative Government presided over a recession.

With more people out of work and fewer businesses succeeding, the Government end up paying out more in benefits and getting less in through taxes. They are filling that gap with the £158 billion more borrowing. The inheritance that that leaves for the next Government will mean more tough decisions about taxation and spending—the unnecessary and avoidable cost of the Government’s failure.

Mrs Madeleine Moon (Bridgend) (Lab):
Unemployment among all 16 to 24-year-olds on jobseeker’s allowance in the Bridgend constituency is 8.8%. Would one way forward be to grant a one-year national insurance holiday, so that small businesses could take on young people, give them employment and the opportunity to experience work?

Rachel Reeves:
My hon. Friend is exactly right. That is why, as part of Labour’s five-point plan for jobs and growth, we include a national insurance holiday for all small businesses taking on new workers—a policy that would help small businesses and the more than 1 million young people who are desperately searching for work.

Elizabeth Truss (South West Norfolk) (Con):
Does the hon. Lady accept responsibility for the failure to skill up our young people to take on jobs? For example, after the Labour party’s 13 years in office, we had the smallest proportion of 16 to 18-year-olds studying maths of any OECD country.

Rachel Reeves:
People are not getting jobs at the moment not because they do not have skills but because the jobs are not available. In all our constituencies, five or 10 people are chasing every job. That is why unemployment is rising. Until the Government take responsibility for that, the numbers will get worse, not better.

The price that families struggling with the consequences of redundancy and young people forced to abandon their career plans pay is incalculable. We cannot go on like that. Maybe some hon. Members—we have already heard from many of them—greet the prospect of rising unemployment with a degree of fatalism, perhaps resignation. They may feel that the punishment being inflicted on innocent families and young people is the sad but inevitable consequence of austerity and economic adjustment. Indeed, as I said earlier, there is a grim familiarity about the figures, which bear a depressing resemblance to the record of previous Conservative Governments.

Mr Graham Stuart (Beverley and Holderness) (Con):
The hon. Lady talks about a grim familiarity. Does she acknowledge that every Labour Government in history ended with higher unemployment than they started

23 Jan 2012 : Column 90

with? After a 40% rise in youth unemployment under the previous Government, some humility is required on both sides of the House, but not least on hers.

Rachel Reeves:
Unemployment has reached 3 million twice, both times under Conservative Governments. At the last election, unemployment was falling; today, it is rising.

Mr Stuart:
That is because we are clearing up your mess.

Rachel Reeves:
In the 1980s and early 1990s, unemployment reached 3 million. Was that because Conservative Governments were clearing up a Labour mess? Really? I think it was because of the policies that Conservative Governments always pursue—policies that hurt young people and put more people out of work. That is the reality of Conservative Governments.

Labour Members are not complacent. We do not say that it is inevitable, that it has got to happen and that 3 million unemployed is a price worth paying. Labour Members are not prepared to give up on young people and we urge the Government not to give up on them, either.

In the coalition agreement, the Government said that a fundamental goal would be to

“sustain the recovery and to protect jobs.”

Before the election, the Prime Minister told voters that jobs would be his top priority. He said:

“I understand if you leave people unemployed, and short term unemployment becomes long term, then it becomes a lifetime of unemployment. It’s a waste of life. I must stop it happening.”

He was right then, but he does nothing now. The Deputy Prime Minister said earlier this month that

“supporting people into work is my priority for 2012”.

He is right, yet he does nothing.

We must—and we will—hold the Government to their promises because we cannot allow the next generation to be denied the chance of expanded opportunities that has always been the promise of Britain.

Margot James (Stourbridge) (Con):
Will the hon. Lady acknowledge that long-term youth unemployment is falling—and, indeed, has fallen by 5%? Will she also acknowledge that half a million new jobs have been created in the private sector in the past year? Currently, there are 90,000 vacancies in retail, 44,000 in hospitality and 11,000 in construction. What matters is that the Government, through the Work programme and so many other interventions, are maximising the skills and training for young people to get them into work.

Rachel Reeves:
In the hon. Lady’s constituency, long-term youth unemployment has gone up by 25% in the past few months. I do not know what she says to her constituents—“There’s loads of jobs out there. Just go and get one”? More people are chasing jobs than there are jobs available. That is because the Government are pushing more and more people out of work. I am sorry that the hon. Lady does not know the numbers for her constituency, but we know.

Charlie Elphicke (Dover) (Con):
The hon. Lady talked about the scarring effect of the fast-buck culture. Will she condemn the right hon. Member for South Shields (David Miliband) for taking a consultancy with private equity?

23 Jan 2012 : Column 91

Rachel Reeves:
I will not condemn my right hon. Friend for taking a job. I am talking about the reality of the challenge that people in our constituencies face. More and more people are out of work. We should listen to them. They are saying that they are getting degrees, A-levels and vocational qualifications but that they cannot find work. As I have said, many would be shocked that many MPs say, “That’s just inevitable—it’s just what happens, and nothing can be done about it.” That is not acceptable. Our constituents see unemployment rising. The House should be taking action to address that challenge.

Sheila Gilmore (Edinburgh East) (Lab):
I would have intervened earlier, but I was trying to work out the arithmetic of Government Members. We are constantly told that 500,000 jobs were created last year, but we have been told about them for the past 20 months. Does my hon. Friend agree that Government Members cannot constantly refer to those same jobs, which were largely the result of the stimulus applied by the previous Labour Government?

Rachel Reeves:
I agree with my hon. Friend. We have to look only at the forecasts from, for example, the independent OBR, which says that unemployment will continue to rise this year, or at the OECD numbers, which say that unemployment will continue to rise into 2013. That is the reality.

I am sure we will hear the Chief Secretary to the Treasury and others defend the Government’s inaction and talk about their various half-baked and half-hearted solutions. We look forward to hearing a report on the progress of those initiatives, and in particular what difference the Government expect them to make to future unemployment. As I have said, the OBR has said that there is no reason for it to revise its unemployment projections as a result of the Government’s measures.

The Government’s response is inadequate for the scale of the challenge. When the Prime Minister was challenged last week on his performance on unemployment, all he could do was admit with regret that youth unemployment is a problem. However, the Opposition are asking the Government not simply to acknowledge they have a problem—we all know that—but to do something about it. The Prime Minister says he takes responsibility for everything that happens in our economy, but taking responsibility means taking action.

Claire Perry (Devizes) (Con):
Unemployment in my constituency is creeping upwards and long-term unemployment is coming down, but in both my constituency and the hon. Lady’s constituency apprenticeship starts are increasing at an incredibly rapid rate. Can she and I agree on one thing: that the best way to get young people into work is to get them such opportunities with the private sector, and relentlessly to support them, as this Government are doing?

Rachel Reeves:
I expect the hon. Lady’s constituents, like mine, regret that the Government cancelled the future jobs fund, which was helping young people back into work. Since that cancellation, long-term youth unemployment in her constituency has gone up not just by a little bit, but by 36%. That is the reality that her constituents face day in, day out.

23 Jan 2012 : Column 92

I hope we will not hear the usual hand-wringing—although I might have to give up that hope—or the usual shoulder-shrugging or blame-shifting. The jobs crisis is not a fact of life or a force of nature, and the Government cannot play the innocent bystander, as they have tried to do. The jobs crisis is a result of the choices they have made. They chose to cut too far and too fast; to abolish employment programmes that were working; and to destroy job opportunities in both public and private sectors.

Mark Pritchard (The Wrekin) (Con):
The hon. Lady approaches such matters very thoughtfully indeed, and as a future Labour leader I would expect nothing else of her, much to the shock and horror of the shadow Chancellor.

Does the hon. Lady accept that the economy needs to be rebalanced and that we need more tax producers than tax consumers? Surely we can all agree on that.

Rachel Reeves:
I am not sure how the Government will rebalance the economy by throwing more people on the scrapheap. Perhaps the hon. Gentleman and I will just have to disagree, but that does not seem to me to be the way to rebalance the economy and to get it growing again.

Despite the Government’s mistakes, they still have choices open to them.

Susan Elan Jones (Clwyd South) (Lab):
None of the automated Government Members mentions the VAT tax bombshell, because they must know in their heart of hearts the absolute disgrace of the VAT increase for small companies. Does my hon. Friend agree that when Labour Members speak of a VAT cut for home improvements, we are speaking up for jobs in construction in a way that some Government Members will never understand?

Rachel Reeves:
The cut in VAT to 17.5% is part of Labour’s five-point plan for jobs and growth. It would put £450 in the pockets of an average family, which is desperately needed to help people who are struggling with the rising cost of living—the rising train, energy and petrol prices.

We have rising unemployment and excessive bank bonuses, but it does not have to be that way. While millions of families up and down the country struggle with the effects of redundancy and millions of young people lose the hope of fulfilling their potential, very little is being asked of those with the broadest shoulders. Despite his pre-election promises to tackle the bonus culture, the Prime Minister will not take the measures recommended by the High Pay Commission to make a difference. Despite the Government’s call for more shareholder activism and engagement as a check on excessive remuneration, they wash their hands of the reported decision to award more than £1 million to the chief executive of RBS, in which they are a major shareholder.

Mr James Gray (North Wiltshire) (Con):
Will the hon. Lady express some degree of regret, because bank bonuses under this Government are 40% lower than

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they were under the previous one? She must tell the House who it was who gave Sir Fred Goodwin his knighthood.

Rachel Reeves:
The Leader of the Opposition has said that the knighthood for Fred Goodwin was not warranted, but I do not remember hearing Conservative Members saying that he should not get a knighthood when it was awarded.

Bank bonuses were taxed at 50% in the last year of the Labour Government. That brought in £3.5 billion, which was used to help to support families and to support young people back into work. Unlike Labour, which introduced a tax on bank bonuses, the Government are introducing a tax cut for banks this year. That tax cut is unwarranted and unjustified as unemployment and youth unemployment continue to rise.

The Opposition proposal is simple. While banks are still not doing their job—they are not supporting jobs or growth—the Government must step in to ensure that resources are put to better use. A 50% tax on bank bonuses above £25,000 would, on a cautious estimate, raise enough revenue to support the creation of 100,000 jobs for young people.

We know that such a measure would work because it has worked before. Labour’s 2010 bank bonus tax raised £3.5 billion, according the OBR. The future jobs fund, which was created by the previous Labour Government, supported more than 100,000 people back into work. That is a record of which Labour Members are proud. By contrast, the Government have chosen a tax cut for the banks and a belated, half-hearted and ineffective response to rising youth joblessness.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab):
My hon. Friend is making an excellent speech on Labour’s proposal to create 100,000 jobs for the young from a bankers’ bonus tax. The north-east is bucking the national trend in manufacturing, which is in the doldrums in the rest of the nation, but 7,000 private sector jobs were lost in the past three months of 2011, whereas 4,000 public sector jobs were lost. Given that clear disparity, what does my hon. Friend make of the Prime Minister’s rhetoric on the creation of private sector jobs?

Rachel Reeves:
My hon. Friend speaks passionately about his region of the north-east, and I know he does a huge amount of work for businesses, young people and families in his constituency.

The reality is that northern towns and cities are paying a particularly high price for this Government’s policies. In my city of Leeds, the local authority is losing more than 25% of its grant over the next four years. As a result, more people are losing their jobs and fewer services can be provided. It is people in the poorest areas who are paying the highest price for this Government’s policies.

Several hon. Membersrose—

Rachel Reeves:
I will give way to the hon. Member for Pudsey (Stuart Andrew), who can perhaps try to justify the cuts in the grant to Leeds city council over the next four years.

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Stuart Andrew (Pudsey) (Con):
The hon. Lady talks about cuts to Leeds city council, but does she not remember that it was her Government who took away neighbourhood funding, stripping the city council of £118 million and, funnily enough, giving the money to Sedgefield?

Rachel Reeves:
In Pudsey, which is my next-door constituency, long-term youth unemployment has increased by more than 20% in the last few months. I am sure that the hon. Gentleman will agree that the cuts that Leeds city council is having to endure over the next few years are out of all proportion to any reduction in the neighbourhood grant under the Labour Government. His constituents and mine are the people paying the price.

I hope that we can show in this debate that the House is in touch with the problems of those who are paying the highest price for the failure of this Government’s policies. Hon. Members will know from their own constituencies the heart-breaking stories behind some of the statistics that we have already gone through today, and I am sure that we will hear some of those stories in the debate this evening. Most of all, I hope that this debate will be focused on action—effective and practical measures that can make a difference for the millions at the sharp end of this crisis. The Government have no excuse for inaction. A tax on bank bonuses would be fair and proportionate, and would enable us to address the immediate, pressing and growing challenge of getting young people back into the jobs that are so needed.

7.42 pm

The Chief Secretary to the Treasury (Danny Alexander):
I welcome this opportunity to discuss youth unemployment and bank bonuses. Both matters are hugely important as we tackle this country’s extremely difficult economic circumstances. The recent youth unemployment figures demonstrate just how significant a challenge we face repairing the damage that the previous Government inflicted on the economy, restoring growth and creating new jobs in the recovery. This coalition Government will not let the young and the vulnerable bear the brunt of these difficult times, nor will we let them bear the consequences of the previous Government’s profligacy. Youth unemployment is not a price worth paying.

One thing that the shadow Chief Secretary failed to mention was the record of the Labour Government, who oversaw a 40% rise in youth unemployment.

Meg Hillierrose—

Danny Alexander:
I will give way to the hon. Lady, and then I will make some progress.

Meg Hillier:
What would the right hon. Gentleman say to the young people in my constituency, where there has been a 12.5% increase in youth unemployment among 18 to 24-year-olds from December 2010 to December 2011, on this Government’s watch?

Danny Alexander:
I would say to them that in very difficult times we are doing everything we can to support them. Let me tell the House what we are already doing.

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David Miliband (South Shields) (Lab)rose—

Danny Alexander:
Hold on. I will give way to the former Foreign Secretary, but let me make just a little progress.

We are already providing more apprenticeship places than any previous Government, with an increase of 400,000 in the last year and a commitment to 1.2 million over the entire spending review period. That is at least 250,000 more than the previous Government’s commitment, although the shadow Chief Secretary seems to oppose that increase. As announced in the autumn statement, we are also launching a new £1 billion youth contract to help get young people into work, so that they can learn a trade and get equipped for their future career. Starting this spring, the youth contract will support up to 500,000 young people into education and employment opportunities. The youth contract wage subsidy is targeted at employers in the private sector, creating sustainable private sector jobs for the long term.

Toby Perkins:
The Chief Secretary talks about the previous Government’s record, but I feel as if I am listening to a broken record, because when we are here to debate a motion about this Government’s policies, all we hear is him harking back to the last Government. Will he come up with something constructive about what he is going to do for the millions of people who are unemployed and looking to him for some guidance?

Danny Alexander:
I fear that the hon. Gentleman was planning his question so carefully that he did not listen to my remarks about apprenticeships or the youth contract, which is a vast improvement on the wasteful future jobs fund, which offered subsidies almost three times as high as the youth contract and funded too many temporary jobs in the public sector. In fact, almost 50% of participants in that scheme were claiming benefits again within eight months of starting a future jobs fund job.

David Miliband:
The right hon. Gentleman quoted the figure of 40% for the rise in youth unemployment under the previous Government. It is correct that youth unemployment started rising in 2004, but the allegation against the current Government is that they have made the situation much worse. In my constituency of South Shields there was a 210% increase in long-term youth unemployment in 2011 alone. That is what he has to answer for. It is not that he invented the problem, but his policies are making it worse.

Danny Alexander:
The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) will address the statistical changes that the previous Government made. However, the right hon. Gentleman was in government during a boom, yet his Government presided over an increase in youth unemployment. We are facing serious economic challenges in this country, caused in large part by the actions of the previous Government, and we have to take steps to resolve those problems.

The youth contract offers young people the prospect of long-term private sector employment. It is a scheme that has the full backing of the private sector. As John Cridland, director general of the CBI, has said, it strikes at the “scourge of youth unemployment”.

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Sheila Gilmore:
McDonald’s, which is apparently getting £10 million a year for training people in the things that it normally trains them in and calls the process apprenticeships, said in The Sunday Times yesterday that it had not created a single extra job with that money. What is the Chief Secretary’s response to that?

Danny Alexander:
I have visited companies around the country, in Scotland and England, that have created a significant number of new jobs and new apprenticeships, providing a significant increase in skills. That is the right way to go about it, and that is what we are trying to do with the increase in apprenticeships. I hope that the hon. Lady will welcome that. It is fair to say that the apprenticeships programme and the youth contract complement our Work programme, which is the biggest payment-by-results employment programme that this country has ever seen. The Work programme will provide personalised support to around 2.4 million people over the next five years, helping those most at risk of long-term unemployment.

Alison Seabeck (Plymouth, Moor View) (Lab):
In Plymouth we are dependent on the public sector, and we are also a garrison town. As a result of the Government’s defence decisions, we are seeing a lot of young men, in particular, losing their positions in the services and becoming unemployed. Those coming out of the services are relatively highly skilled, putting pressure on the few vacancies that we have in Plymouth and cutting long-term unemployed young people out of the market. We have seen a 96% increase in the number of the long-term unemployed in Plymouth. What will this Government’s policies do for those young people? Absolutely nothing in Plymouth.

Danny Alexander:
The youth contract, which I have mentioned, along with the Work programme and many other things that we are doing, will help the young people in the hon. Lady’s constituency, and I very much sympathise with the position that she has described.

Mary Macleod (Brentford and Isleworth) (Con):
Does my right hon. Friend agree that apprenticeships are an important part of the solution, by giving young people the opportunity to build their skills? We have record numbers of apprenticeships; indeed, the number of them in my constituency has doubled.

Danny Alexander:
I agree with my hon. Friend: the apprenticeship programme is a vital part of tackling youth unemployment and lifting the skills in our work force. It is a real shame that the Opposition now seem to be opposing the extra investment in apprenticeships that we have made.

Lilian Greenwood (Nottingham South) (Lab) rose—

Geraint Davies (Swansea West) (Lab/Co-op)rose—

Danny Alexander:
I am going to make some progress, and I will give way again shortly.

Across the wider economy we are doing everything we can to foster renewed prosperity, create new jobs across the UK and return the country to sustainable growth. Whether we are talking about regulation, the planning system, reducing corporate taxation, our

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investment in infrastructure or the tax cuts that we are delivering for low-income workers, we are putting forward ambitious plans—plans that we need in these difficult times.

Claire Perry rose—

Danny Alexander:
I will give way in a moment.

We have plans that will help to foster a recovery led by our private sector, by entrepreneurs and by exporters, creating the kind of growth that the Opposition failed to deliver in over a decade in government. We face the monumental task of dealing with their legacy of unsustainable spending and debt-fuelled consumption, which left the coalition the task of dealing with the largest peacetime deficit on record.

John Cryer (Leyton and Wanstead) (Lab) rose—

Geraint Davies rose—

Danny Alexander:
I will give way in a moment.

The Opposition do not seem to realise that tackling that deficit is the vital precondition to sustainable growth. It is only by tackling the deficit that we can provide the certainty, stability and low interest rates that are critical to a recovery. The past 18 months have seen sovereign debt downgrades across the Europe, bail-outs of the weakest Eurozone economies, and countries racing to consolidate at the behest of the bond markets.

Claire Perry:
I should like to bring a local business perspective to the debate. I had dinner last week with a group of people representing small businesses in the Wiltshire area, all of whom said that their businesses looked reasonable and they were thinking about hiring. Most importantly, they said that they had benefited enormously from the economic stability that the Government had created. Has my right hon. Friend heard anything from the Opposition that amounts to a coherent economic policy, or are they simply offering a wish list of chops and changes, and opposing for opposition’s sake?

Danny Alexander:
I have heard nothing coherent from the Opposition, and I have heard nothing from the business community in this country but support for our policies to deal with the deficit and restore this country’s economic credibility. The coalition has never shirked its responsibility to take tough and sometimes unpopular decisions to tackle the deficit and pull the country out of the hole that the previous Government dug. Because we did not delay, and because we took action to get ahead of the curve, we can cut the deficit on our own terms and shelter the UK from the debt storm that has engulfed our nearest neighbours.

Rachel Reeves:
The right hon. Gentleman says that the Government are tackling the deficit, but will he confirm how much extra borrowing there will be during this Parliament, compared with the prediction when they took office? Is that not a cost of their failed economic policies?

Danny Alexander:
I can confirm that according to the latest forecast, there will be significantly increased borrowing compared with the previous one. The hon. Lady should

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have explained in her opening speech that her policies involve substantial further increases in borrowing, which would destroy this country’s economic credibility and the hard-won low interest rates that we have achieved.

As a result of our action, we have record low bond yields that feed through to record low interest rates, which benefit households paying mortgages and businesses refinancing loans right across the country. Whereas our bond yields are just 2.1%, those of Spain have risen to 5.5%, those of Italy remain over 6%, and those of Greece have climbed to a staggering 34%. Even a 1% rise in our market interest rates would force taxpayers to find an extra £21 billion in debt interest payments. A 1% rise in effective mortgage rates would result in an extra £10 billion for mortgage payments.

The Opposition have had 18 months to come to terms with the mess they created, but they still do not get it. It has taken them 18 months to move from the wrong place to all over the place. The Leader of the Opposition called the pay freeze an

“ideological attack on the public sector”,

but he now accepts it. The shadow Chief Secretary to the Treasury called the uprating of pensions with the consumer prices index an “ideologically driven move”, but it is a move that the Opposition have now accepted for their party’s own pension scheme. So let us be clear—financial discipline is not ideological; it is a necessary condition for effective government. In the past 10 days, members of the Labour shadow Cabinet have succeeded in proving that they cannot even convince themselves of the credibility of their economic policy.

Robert Flello (Stoke-on-Trent South) (Lab):
Will the right hon. Gentleman explain his idea of economic stability to my constituents? In my constituency the long-term youth unemployment rate has risen by 162% in the past year. Will he explain how his stability will affect the people of Stoke-on-Trent who are losing jobs hand over fist because of his policies?

Danny Alexander:
If the hon. Gentleman looks around Europe at the countries that have failed to tackle their deficits, he will see much more serious economic problems—problems of the kind that we would have here if we followed Labour’s policies. He should start by apologising for the mess that his party made of the economy.

John Cryer rose—

Danny Alexander:
I am going to make some progress now.

As the Secretary of State for Business, Innovation and Skills outlined today, we will also take the tough decisions to tackle excessive executive pay. At a time when millions of workers face a pay freeze or worse, and when many businesses are confronting a difficult trading environment, the highest-paid cannot be disconnected from reality. That is why the Secretary of State announced new measures to drive through greater transparency on executive pay, to empower shareholders to deliver responsible pay, and to reform remuneration committees to break the old boys club.

It is for that same reason that the Government are leading efforts, domestically and internationally, to reform our banking sector fundamentally in order to protect

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our competitiveness while safeguarding our stability. We are abolishing the tripartite system of regulation that failed so dramatically in the run-up to the last crisis, and putting the Bank of England in charge of both micro and macro-financial supervision. We are reforming the sector itself, as recommended by the Independent Commission on Banking, to safeguard the UK’s position as host to a world-class financial services sector without putting UK taxpayers at risk.

We have implemented a permanent bank levy to ensure that banks make a fair contribution to tackling the deficit, reflecting the risks that they pose to the system while encouraging them to move away from riskier models of funding. As we announced in the autumn statement, we have increased the levy from 1 January this year to ensure that it yields at least £2.5 billion a year, which is more than the amount yielded by the previous Government’s one-off tax on bonuses—a tax that

“failed to change the industry’s behaviour over pay”.

Those are not my words, but those of the previous Chancellor, who was responsible for the policy in the first place.

Through the Financial Services Authority’s remuneration code, we have ensured that bonuses are deferred over at least three years, and linked to the performance of the employee and the firm. Through the disclosure regime, we have provided more transparency than ever on pay. And while the previous Government managed to get only four of the top 15 banks to sign up to the code of practice on taxation for banks that was introduced in 2009, we have ensured that all are signed up.

Our expectations of the banking sector are clear: banks should make a full and fair contribution. They must respect the spirit, not just the letter, of the law, and make a commitment not to use artificial schemes to avoid tax. The new Bank of England Financial Policy Committee, established as a result of this Government’s reforms, has warned that in these turbulent times it is capital levels, not bonus payments, that have to be the priority. Did the hon. Member for Leyton and Wanstead (John Cryer) want to intervene?

John Cryer:
I wanted to intervene while the right hon. Gentleman was speaking earlier.

Danny Alexander:
The hon. Gentleman may intervene now if he wishes to.

John Cryer:
Going back to the subject of unemployment rates, youth unemployment in my constituency has gone up by 140% since the election. That is what is happening now, not what happened under the previous Government. Will the Chief Secretary to the Treasury deal with the immediate issue and tell us why that is happening? Will he also tell us whether he thinks it is a price worth paying?

Danny Alexander:
As I made clear earlier, I do not consider it to be a price worth paying. That is why the Government are doing everything possible, through investment in apprenticeships, in our youth contract and in the Work programme, to ensure that there are opportunities for people.

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Seema Malhotra (Feltham and Heston) (Lab/Co-op):
Will the right hon. Gentleman tell us how many jobs the Work programme has created?

Danny Alexander:
I cannot give the hon. Lady that information—[Hon. Members: “Ah!”] I welcome her to her place and congratulate her on her election. In due course the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) will provide that information. I can tell her, however, that Work programme providers are making a difference across the country, helping people to come off all sorts of benefits and acquire the necessary skills and support to get back into work.

Toby Perkins rose—

Meg Hillier rose—

Danny Alexander:
I have already given way to the hon. Gentleman and to the hon. Lady, and I want to make some progress.

Katy Clark (North Ayrshire and Arran) (Lab):
The right hon. Gentleman will be aware that while the living standards of those on low and medium incomes are going down, the wealth of the super-rich is going up. Will he give an undertaking that he will take action on this issue, and that the gap between rich and poor will be smaller by the next election?

Danny Alexander:
The Government have taken on the issue of ensuring that the wealthiest pay a greater share, to ensure that there is fairness in our deficit reduction plans. For example, we have increased capital gains tax and put in place the new bank levy that I have mentioned. We have also maintained the 50p rate of income tax. We are making substantial changes to ensure that the wealthiest pay their fair share.

Alec Shelbrooke (Elmet and Rothwell) (Con):
On the point just raised in an intervention, we hear much crowing from Opposition Members, but does my right hon. Friend think that they might persuade their former leader and Prime Minister, Tony Blair, to pay more than £315,000 in tax on a £12 million income?

Danny Alexander:
My hon. Friend has made his point, but I do not think that it is for me to comment on the tax affairs of any individual taxpayer.

Meg Hillier:
Last week the right hon. Gentleman made a speech in which he talked about co-operatives, and ideas to bring them into the mainstream. When the Government had the choice and opportunity to remutualise Northern Rock, why did they sell it off to a private bank? Surely a mutual would have been fairer to all, particularly to the taxpayer, than a cheap sell-off.

Danny Alexander:
I am quite confident that in that case we chose the option that was best for the taxpayer, best for Northern Rock customers and best for the many hard-working people who work for Northern Rock in the north-east of England. I think that was the right decision on all those bases.

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Toby Perkins:
Will the right hon. Gentleman give way?

Danny Alexander:
No, I will not.

I mentioned the Financial Policy Committee of the Bank of England and its comments. That is why the FSA will scrutinise all proposed bonuses to make sure that they are not paid at the expense of rebuilding capital. There has already been some progress, with levels of bonus payment down significantly. Hon. Members should consider how far they have fallen. When the shadow Chancellor was a City Minister in the Treasury, bonus levels were £11.6 billion, whereas last year they were almost half that, at £6.7 billion. We fully expect them to fall further this year.

Lisa Nandy (Wigan) (Lab):
May I ask the right hon. Gentleman to consider one more fact before he concludes on this subject? When youth unemployment rose under the previous Government, that was largely due to increases in labour supply, but since his Government took over, the massive increases in youth unemployment have been due to a collapse in labour demand. That is why the Opposition are so desperately asking his Government to change course. If the hon. Gentleman cares about this issue, as he has said that he does, will he confirm today that he will change course and prioritise growth over jobs?

Danny Alexander:
I am not sure that one can prioritise growth over jobs—and that is the first explanation I have heard from Opposition Members of the reason why youth unemployment rose during Labour’s time in office. I do not know whether that opinion is shared by those on the Front Bench.

As I have made clear, we are prioritising tackling youth unemployment. We do not want to see young people blighted by long-term youth unemployment as they were in the 1980s. That is why the youth contract, our investment in apprenticeships and the Work programme are all necessary to help young people back into work.

Several hon. Membersrose—

Danny Alexander:
I will give way to the hon. Member for Barrow and Furness (John Woodcock), who has not intervened before.

John Woodcock (Barrow and Furness) (Lab/Co-op):
The Chief Secretary is being very up-front with the House about the fact that he believes that he is doing everything in his power to tackle youth unemployment—yet according to the Office for Budget Responsibility’s own figures, unemployment is scheduled to rise in the coming period. Does he think that that rise is inevitable?

Mr Deputy Speaker (Mr Lindsay Hoyle):
I call Douglas Alexander.

Danny Alexander:
I do not think that he is on the Government Front Bench any more, Mr Deputy Speaker.

A fair account of the OBR’s forecast would also reflect the fact that it says that unemployment will come down to 6.2% by the end of the forecast period. That is a fair reflection of the OBR’s forecast. Of course I wish that we had not inherited such desperate economic

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circumstances from the previous Government, I wish that they had not left us the largest budget deficit in peacetime history, and I wish that we had not inherited a situation in which, as the same OBR report to which the hon. Member for Barrow and Furness refers showed, the damage done to our economy by the bust was even deeper than expected. He should probably reflect on that point, too.

On bonuses, we fully expect them to fall further this year and, as we approach the season, let me be clear that this is just the start. Across the banking sector, Labour allowed a sense of bonus entitlement to grow. In no other industry is there such a distorted culture of bonus entitlement. Following 13 years of Labour Government we have come some way towards dismantling that culture in the banking sector, but we accept that we have a long way to go to make a fundamental change in attitudes to pay. The coming bonus round provides another chance for the banking sector and its shareholders to demonstrate leadership on pay. That message is already getting through. As Otto Thoresen, director general of the Association of British Insurers, wrote to bank chairs last December,

“it can no longer be business as usual for this remuneration round.”

I agree with that, and the Government will play our part.

We have already said that for RBS and Lloyds Banking Group there will be a limit of £2,000 on cash bonuses, as we also imposed last year.

Richard Fuller (Bedford) (Con):
There is a lot of consensus on both sides of the House that people who are wealthy should be looking to see what they can do to help. Part of what the Opposition miss is the fact that one thing the Government have done—although they could do more—is to promote the enterprise investment scheme, which gives people the opportunity to invest directly in small businesses. Will my right hon. Friend tell me what he is doing to promote that scheme, and in particular, how small businesses that benefit from it can also take part in the youth contract?

Danny Alexander:
The Government have made decisions to improve the benefits available through the enterprise investment scheme precisely to encourage more people to invest in small firms in such a way. The new seed enterprise investment scheme, which we announced in the autumn statement, will further help new businesses to be created through that route.

We have already said that for RBS and Lloyds Banking Group there will be a limit of £2,000 on cash bonuses, as was imposed last year, and let me reiterate that the bonus pool this year must be far, far lower than it was last year, and more transparent too. Tackling bank bonuses and youth unemployment is not just an economic challenge, but a challenge that is at the centre of the coalition’s purpose, which is to promote a sustainable and responsible banking sector that puts consumers’ needs at the centre of the financial system.

Danny Alexander:
I shall give way one last time, and then I shall finish my speech.

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Julie Hilling:
Is the right hon. Gentleman confirming, then, that the chief executive of RBS will only get a £2,000 bonus?

Danny Alexander:
I am doing no such thing, because those announcements will be made in due course. I have said that bonuses in the banks that we own will have to be far lower than they were last year. The cash element of bonuses will be limited to £2,000 for all employees, but of course there are other parts to bonuses, too.

Returning our country to prosperity has been the founding purpose of the coalition Government, but in our determination to restore growth, we will put fairness at the very heart of our recovery, tackling gross inequity in senior pay and tackling the perils of youth unemployment to ensure that young people’s prospects are not blighted in the way that those of too many were in the 1980s.

A fair and sustainable recovery demands leadership, and that is exactly what we are providing. Labour cannot be taken seriously on the economy until it admits the mistakes it made when it was in power. If Labour was really changing its position on the economy, the first thing it would do is say sorry. Sorry for letting youth unemployment get out of control, sorry for letting the banking sector get out of control, and sorry for letting the deficit and debt get out of—[Interruption.]

Mr Deputy Speaker (Mr Lindsay Hoyle):
Order. Hon. Members should calm down, as a lot of Back-Benchers want to speak as well.

Danny Alexander:
I do not think that those on the Opposition Front were trying to shout the apology that the country wants from them. They should say sorry, too, for letting the deficit and the country’s debt get out of control. Instead, all we have heard today is the apology of a speech made by the shadow Chief Secretary.

Rachel Reeves:
I wonder when the electorate might get an apology from the Liberal Democrats for trebling university tuition fees and imposing a VAT bombshell.

Danny Alexander:
I am sorry that the shadow Chief Secretary did not take the opportunity to offer an apology for the terrible mess made by her party and the Government of which the shadow Chancellor was a leading member.

It is the coalition Government who are investing in skills, infrastructure and innovation to create new opportunities in the recovery. It is this coalition that is reforming a broken financial sector to entrench greater stability and embed long-term sustainability. It is this coalition Government alone who are determined to face up to today’s economic challenges to build tomorrow’s fair, prosperous and sustainable economy.

Several hon. Membersrose—

Mr Deputy Speaker:
Order. I remind hon. Members that there is a six-minute limit on speeches.

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8.8 pm

Mr George Mudie (Leeds East) (Lab):
I want to raise three points. The hon. Member for Devizes (Claire Perry), who has left the Chamber, said that all we were proposing was a wish list. It is a wish list and I cannot understand why the Government are opposing it. Regardless of how they view our performance and their performance on youth unemployment, not enough is being done, and the first wish in the motion is for £2 billion to be put in to help with youth unemployment. I think that is a decent thing to have on a wish list. Secondly, we are asking for that money to come from the people who caused the difficulty, and that would be a very good thing.

I heard some of the comments directed at my hon. Friend the Member for Leeds West (Rachel Reeves) and I think of parallel universes. I envy Government Members if they have the situation that they described in their constituencies. I have represented my constituency for 20 years as an MP and 20 years as a councillor and it is probably in its saddest state since the ’80s, which were a desperate time. Unemployment among youngsters then was along the levels we are seeing now, and as a result their lives were blighted and their self-esteem and confidence went. That situation affected families and communities, and it was one of the saddest times to represent a community. When the Labour Government came in they put in a lot of money and effort and they made a difference, but they did not finish the job and those issues remain. Communities are blighted by low self-esteem, low confidence and low ambition, and the real fear now is that that will be entrenched beyond any help or hope. I do not understand how anyone can abuse the shadow Chief Secretary when she raises the issue of youth unemployment, or read a speech with the kind of blandness we have just heard, as though they were describing a perfect world. This is about people’s lives and their families’ lives being ruined.

Rehman Chishti:
Looking at what we are doing now, does the hon. Gentleman welcome the Government’s pledge to put £150 million towards the creation of university technical colleges, which will improve the skills of our young people?

Mr Mudie:
I would rather the Government had not trebled tuition fees. I would rather that instead of spending £150 million they were taking the opportunity to raise £2 billion to put into youth employment. This is a very serious, non-political matter and people’s lives are going to be ruined unless they get urgent help. We should see that as a priority, and we should have no compunction about taking that money from the people who caused this difficulty. Governments, rating agencies and regulators also played a part but the sheer greed and irresponsibility of the banking and financial industry takes my breath away.

The people who caused the difficulty earn huge salaries because of gambling in the investment market, which has brought country after country and bank after bank

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to their knees, and which is now imperilling people’s standard of living—their homes, jobs and future. I find that unacceptable.

The shadow Minister has called for leadership, but real leadership would not involve avoiding questions about whether there is going to be a limit of £2,000 on bank bonuses. The senior director of RBS will be disappointed if he is not allowed to take his £4 million and the chief executive is expecting £2.5 million, but this is in a bank that the Government own. If we want leadership, it should come from the Chancellor and the Government, who should take the steps that are needed.

Esther McVey (Wirral West) (Con):
Will the hon. Gentleman give way?

Mr Mudie:
No, I am sorry because I will be stopped quite soon.

The last point I want to make concerns the irresponsibility of the banks in refusing to operate Project Merlin, which would have brought jobs for younger and older people. The cynical and shoddy way that they got out of that agreement is totally unacceptable, as is the way they are refusing to fund small and medium-sized businesses. If we are going to rebalance the economy, that is the area that will provide the jobs. We need the Government to show some leadership because the banks must be forced to fund and put resources into that sector.

8.14 pm

Mr David Ruffley (Bury St Edmunds) (Con):
Youth unemployment and bankers’ bonuses are both too high, and the Opposition hope that by taxing the latter they can help the former. Let us first agree that help for the young unemployed is vital. The scar of joblessness destroys self-respect and will also damage the long-term economic growth rate of this country. What are the Government doing about it? They have already announced a record number of apprenticeships—440,000 in this Parliament—as well as a £1 billion youth contract and more than 250,000 more work experience places. The proposal for a tax on bankers’ bonuses is what I want to focus on. My starting point is that crony capitalism and big financial rewards for failure not only are morally offensive but they subvert the principles on which successful capitalism depends.

Jake Berry:
Let me pick up on the point about things being morally offensive. We have heard about the Leader of the Opposition calling for Fred Goodwin’s knighthood to be removed. Does my hon. Friend agree that if that happened it would also make sense for former Labour Cabinet members who were part of the Government who led to this bankruptcy for Britain to give up their peerages in the other place?

Mr Ruffley:
That is an interesting suggestion. I also think that the former Prime Minister should make a personal apology when our Prime Minister, who is an infinitely better one, strips Sir Fred Goodwin of that ill-deserved knighthood.

Currently, there are excessive bonuses within the sector that give capitalism a bad name. They have fostered the belief that there is a class of people who pay themselves pretty much what they like while the rest of the country has to deal with the consequences of what many of

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those people served up to this country by way of financial crisis. The idea that this is something that Conservatives are casual about is utterly false. The speculation by the Mayor of London about what the greatest pro-enterprise Prime Minister of the previous century would have thought of today’s sorry state of affairs was interesting. He said that we should ask

“what Margaret Thatcher would have thought of a system where directors sit on each other’s “remcoms”—remuneration committees—and defend each other’s expanding awards, even when the directors in question have presided over commercial disaster of one kind or another. She would have thought it was absurd.”

All Conservatives think that is absurd and that something must be done about it. We think that two things should be done. First, we want to encourage people of talent to come to the UK, stay here and make the City of London the greatest financial capital on planet Earth. The second thing we need to do is foster a regime in which performance is more closely tied to reward. Quite frankly, that is not extant.

I suggest that a new blanket tax on bankers’ bonuses would undermine those aims, or at best do nothing to advance them. It would do nothing to distinguish between cases in which an executive had genuinely earned a reward by turning around a failing organisation, increasing profitability or increasing returns to shareholders, and cases in which executives had taken advantage of lax scrutiny to take excessive rewards for their failure. There is a distinction between the rich and the undeserving rich, of whom Sir Fred Goodwin is a terrible exemplar.

Geraint Davies:
The hon. Gentleman talks about bankers, but he will be aware that among the FTSE 100 companies, there has been an average 49% increase in directors’ pay, and many of those companies have not had a proportionate increase in share value or profitability. Is he saying that his Government should introduce specific measures to cap pay increases for non-banker directors of FTSE 100 companies? If he is not, he is saying nothing.

Mr Ruffley:
I am not suggesting that for a minute, and if the hon. Gentleman bothered to read the motion, he would see that it relates to excessive bankers’ bonuses.

The fact remains that we have to be careful when we talk about a tax on banking. My right hon. Friend the Chancellor sensibly introduced a levy on bank balance sheets, something that the Labour party was not prepared to do. We were one of the first countries in the world to do that, and it will raise more than £2.5 billion a year. Instead of introducing another tax as the motion proposes, we should do more to discourage the granting of excessive bonuses in the first place. That would have a very happy by-product. When Robert Jenkins gave evidence to the Treasury Committee last week—for those who have not been initiated into these affairs, he is a member of the interim Financial Policy Committee, and a former banker—he said something very interesting:

“Every £1 billion of less bonus would support £20 billion of additional small business lending.”

I defy anyone on either side of the House to deny the wisdom of that.

I am talking about the unjustifiably excessive bonuses paid to executives in banks that have failed or are failing. Stephen Hester is, we are told, looking to accept a bonus for 2011, despite the fact that his bank’s share

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price has fallen out of bed. Eric Daniels, who was the chief executive of another failed business—Lloyds-HBOS—took seven-figure bonuses before he was booted out. What the Labour party needs to understand is that that culture, which we all deprecate, did not grow up in the past 18 months. I hope that Labour will show a bit more humility in this debate than it has done so far. It did not regulate the banks properly; it sat by while these bonuses were being paid, year after year; and it gave knighthoods to the miscreants who accepted them. Incidentally, it was the Labour Government who allowed some private equity bosses to pay very little tax—less tax than the cleaners in their offices. We shall therefore take no lessons from Labour on regulation and on what we do about a state of affairs that I think we all agree is unacceptable.

Shareholders are not doing their job sufficiently well; that is why I urge the Government to change the law so that the threshold for shareholder approval of remuneration packages is shifted from 50% to 75%. I know that Fidelity, one of the largest holders of shares in UK banks, strongly supports that. Also, fund managers do not have much incentive to think in a long-term fashion; that is why I hope that the Financial Policy Committee, when it is up and running, and the Prudential Regulation Authority—the new regulator—will ensure that the Financial Services Authority’s remuneration code, which covers only 2,500 firms, covers very many more. Bonus clawback—clawing back money given to executives who depart in disgrace and failure—is something that the Government need to talk about. Lloyds is apparently looking into that.

More tax is not the answer; better regulation, under this Government, is.

8.23 pm

Lisa Nandy (Wigan) (Lab):
I want to make the case as to why, at a time when not everything can be priority, this subject really ought to be one. It is not just because in my constituency of Wigan, one in four young people is not in education, employment or training, and it is not just because I have begun to detect a sense of hopelessness among them that really frightens me. It frightens me because for nearly a decade before I came to this place, I worked with some of the most disadvantaged children and young people in this country, and what I am detecting in my constituency is a ripple effect: the sense of hopelessness is spreading outwards from the most disadvantaged to groups of young people who previously had strong hope for the future and strong resilience within themselves and their families. It is because young people cannot wait that I want to make the case for the proposal in the motion.

We heard from my hon. Friend the Member for Leeds West (Rachel Reeves) about the wage-scarring effect, and we heard a powerful speech from my hon. Friend the Member for Leeds East (Mr Mudie) about the impact that youth unemployment has on young people’s confidence. I have seen for myself the levelling-down effect when jobs are scarce: graduates leave university with a sense of despair because they have to take jobs that they could have got three years earlier; 18-year-olds leave college with a sense of despair because they have to take jobs that they could have got two years earlier;

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and 16-year-olds are left with literally nowhere to go. That is why the issue should be our top priority: it is different, and it cannot wait.

I worked for five years for the Children’s Society, which has spoken out very powerfully about child poverty this week, and I saw what happened to young people who were put out of work in the 1980s. They never recovered resilience in the labour market and were forced to bring up their children in workless households. Twenty years later, we were still dealing with the impact of that, so I say to Ministers that they are storing up trouble for future generations if they do not take action now.

I am concerned about what I have heard, because the Government are tinkering when what we really need is a step change in approach to the wider economy and to this issue. Young people have a very, very strong sense of fairness, which is why the starting point that my hon. Friend the Member for Leeds West has chosen is exactly the right one. More than anyone else whom I represent, young people understand the concept of something for something. They have seen the education maintenance allowance, which they worked hard to get, axed; they have seen Aimhigher, which raised the number of young people in my constituency going to university by 40% in six years, axed; they have seen tuition fees hiked up way beyond anything they could even conceive of paying; and they have seen the future jobs fund, which was making a dramatic difference to their confidence and to their friends’ confidence, axed. At the same time, they see bankers’ bonuses and pay continue to rise, so it is no wonder that they are angry.

Meg Hillier:
Does my hon. Friend agree that there may be poverty among young people—my constituency, unfortunately, was shown to have a high level of poverty by the excellent work that she referenced—but there is no poverty of aspiration, certainly not in my constituency? Will she comment on whether that is the case in hers?

Lisa Nandy:
I share that sentiment, but I am concerned. Those young people are turning to a Government who said, “If you work hard and try hard, we will support you” but they see poverty of aspiration from the Government. They are angry, because the Government have broken the deal and the pact that, if young people tried hard, they would have the chance of a better future.

Duncan Hames (Chippenham) (LD):
The hon. Lady is making a typically impassioned and impressive speech. On the question of whether the Government broke the deal, would she not, given her experience before coming to the House, acknowledge that youth unemployment has been rising consistently since 2004? In my constituency, unemployment trebled in the previous Parliament, so the Government need to be prepared to look at proposals and solutions other than those that did not work in previous Parliaments.

Lisa Nandy:
I am afraid that the facts do not bear that out. I agree, however, about the stubborn problem of structural youth unemployment, which I shall come on to.

I want to use the last few minutes of my speech to discuss what more must be done if we are serious about giving young people hope for the future. I have made the case that, although the Work programme is a welcome

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step, it is tinkering when we need fundamental change in the system. Job preparation, while worth while and extremely important for some of my constituents, who need support, confidence and help to get a job, is not enough if there are no jobs to go to.

That is why I believe that growth, growth and growth have to be the Government’s priority. In my constituency, and across the country, as we have heard from my hon. Friends, there are simply no jobs to go to. I have argued that increases in youth unemployment under the previous Government were caused by an increase in labour supply. The increase in youth unemployment under this Government is the consequence of a collapse in labour demand. The focus on youth unemployment masks a rapid fall in youth employment, which is partly accounted for by the abolition of full-time education places. If Ministers are serious about this issue, they must speak to their hon. Friends in the Department for Education, and make the point that it does not make any sense to cut education places at a time like this.

Will Ministers commit today to using every lever at their disposal? There are so many things that a Government can do, and it is distressing for young people to hear that the economic situation dictates inaction, when in fact we could have action and we could have it now. The Government could use their procurement power to ensure that young people have apprenticeships—it is immoral to award public contracts to firms that will not give apprenticeships and opportunities to our young people. The Government could also use their procurement power to make sure that those contracts go to firms that provide real, lasting, paid jobs with a decent career structure, to give those young people the resilience in the labour market that they need. That is why I urge Ministers to think again about the future jobs fund. I know that that has become a political issue, but I and my colleagues have seen the dramatic long-term difference that it was beginning to make for young people in our constituencies.

Structural youth unemployment remained stubbornly at around 10% under the previous Government, despite huge efforts, particularly by my right hon. Friend the Member for Morley and Outwood (Ed Balls), to do something about it. The only way to tackle structural youth unemployment is through partnership working, with the public, the private and the third sectors. I have seen recently some attempts to focus on the most disadvantaged young people—for example, in young offenders institutions—and a focus on education to lead young people into employment.

Ministers should be very careful about how they set targets and measure progress. For some of the young people with whom I have worked, with the extremely serious problems that they have had, simply getting up in the morning and eating breakfast has been a challenge. Ministers must be careful not to throw away real progress for some of the most disadvantaged young people in this country, or they will not tackle the structural problem of youth unemployment, which we tried so hard to deal with. Ministers know that some young people—disabled young people, young carers, those with transport difficulties—need extra help. I am sure Ministers know that, and I hope that help will be forthcoming.

Inaction on this issue is a moral choice with lasting consequences for a group of young people whom those on the Government Benches may never meet, but to whom they owe a heavy responsibility.

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8.32 pm

Jake Berry (Rossendale and Darwen) (Con):
It is clear to everybody in the House, regardless which side they sit on, that we are facing exceptionally difficult economic times in this country. I calculated that by the end of this speech, with a six-minute time limit in force and with no interventions, we will have spent in excess of £500,000 just on debt interest. Our national debt is like a credit card, and the sooner we get to grips with it, the better. I do not want to have to look the next generation of young people in the eye and say, “We were the Government, we were the group of MPs, who shoved our heads in the sand and refused to tackle our national debt,” so that we could pass it on to them.

We have seen a hugely unwelcome increase in unemployment, and an exacerbation of the existing problem of youth unemployment. The Leader of the Opposition admitted in November last year that youth unemployment was not invented by this Government, but was a problem under the previous Government. The motion seeks to link the problem of youth unemployment simplistically to a failed tax on bankers’ bonuses.

This truly is the tax that keeps on giving. So far, there have been proposals to use it to tackle unemployment among older people, to tackle unemployment among younger people, to fund capital projects, to reverse VAT increases, to cut taxes on fuel, to cut VAT on home improvements, to build 25,000 more houses, and today to create 100,000 new jobs. That clearly shows that the Labour party has no new ideas. It cannot be only today’s ICM/Guardian poll that is depressing them. It is also the fact that a party that claims to represent the workers has come to represent the something-for-nothing culture, a party that claims to fight inequality increased inequality in 13 years in government, and at the end of the largest economic boom that we have ever witnessed, Labour left 270,000 more young people out of work than when it came to office. That is an appalling legacy. The solution is not more of the same, not to pile debt on debt, not to try and spend ourselves rich.

The motion sounds like the Opposition are being advised by Charles Ponzi and has about as much credence as the claim by the captain of the Costa Concordia that he slipped and fell into the lifeboat. The Government, however, must take true steps to tackle youth unemployment, and there is no panacea.

One thing we must do is tackle the skills gap. The hon. Member for Leeds West (Rachel Reeves), who is no longer in her place, said that she hoped MPs would today bring forward positive solutions on the question of what they can do. A little-known fact about the junction 4 retail park in Darwen—unless one is the MP for the area—is that it is the country’s specialist area for the creation of computer games. When I ask those businesses how many young people from the area they employ, they say none, because young people in Darwen are leaving our schools without the menu of skills that the businesses want when they recruit. That is why it is vital that we continue to increase the links between schools and local employers.

Esther McVey:
It is not just computer games and electronics companies that say that. The Institute for Manufacturing, the Institute of Physics and the chemicals industry say that we have not produced enough people in science to be the technicians and engineers, that we

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have a dearth of those skills and that they have had to bring in people from outside the country to do those jobs, which is a crying shame.

Jake Berry:
I agree. Of particular joy to me is the fact that my constituency has a new academy school, which has entrepreneurship and technology at its heart. We are starting to have those conversations with business in order to equip our young people for the jobs market.

I want to talk about what hon. Members can do positively in their constituencies to tackle youth unemployment. As we have heard, much of it is about leadership. At the start of next month I will launch the “100 in 100” campaign in my constituency, which is my pledge to get 100 people into 100 apprenticeships in 100 days. Building up to this, I have visited as many local companies as I can to talk with them about what we hope to do, and I have found that there is a huge appetite for giving young people a chance.

Gordon Birtwistle (Burnley) (LD):
I congratulate my hon. Friend on the initiative he is leading in his constituency. I did the same thing only last year, and the companies in Burnley were delighted to take on 107 apprentices in 100 days, which shows that there are companies that are keen to take on young people. A vast number of skilled people working in the manufacturing sector in our area are now in excess of 40 years of age, and the companies recognise that in future they might not have the skills to deliver the products that the world wants.

Jake Berry:
I thank my hon. Friend for making such an eloquent point. As my near neighbour, he is really throwing the gauntlet down, but I am confident that Rossendale and Darwen will more than beat 107 apprenticeships in 100 days.

I want to talk about some of the businesses that I have been to see that are going to support us and that, even before we started, pledged to give a young person a chance by taking on a new apprentice. Businesses from every section of the economy are involved, not just those in the biblical trades or manufacturing. They include Home Manor residential nursing home, Whitehead’s traditional butchers, DHJ Weisters Ltd, Aquasoft Solutions, which is a computer company, McCambridge Group, Crown Paints, WEC Group, which is an engineering company, Turnbull Prints and Anglo Recycling. We have across the entire constituency a commitment from business to give young people a chance.

When I talk with those businesses, they tell me that the Government’s signal that they want to rebalance the economy and will support apprenticeships has helped them to decide to take on apprentices. One thing in particular has changed their mind: the pledge to give a £1,500 incentive to smaller firms to take on a young person. We can get involved in the debate about what is right and wrong about the apprentice scheme and what else we should be doing, but I appeal to all hon. Members to go out there, speak to businesses in their constituencies, advocate why they should support young people, why they should invest in their work force, why young people would be good for their business, bringing fresh ideas and new skills, and ask them whether they will take a young person on and give them a chance.

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If just throwing money at the problem solved youth unemployment, the previous Government would have done so, because they threw lots at it. The only way we can solve part of the youth unemployment problem is through training and leadership, and leadership should come from hon. Members, from employers and from the Government. There is nothing more important than getting our young people back to work.

8.40 pm

Mr Pat McFadden (Wolverhampton South East) (Lab):
At first glance it might seem as though youth unemployment and bank bonuses are separate issues, or that if they are linked it is only at the level of an argument about fairness or equity. But that is not the case. The level of reward at the very top of the financial services industry is not just an argument about fairness or equity, although it is certainly that; it is something that has a material effect on the functions carried out by our financial institutions, including the level of lending available to the economy and, thus, the capacity for job creation in it.

I should make it clear that I am talking about bonuses at the very top. We should not forget that the vast majority of people who work in the financial services industry receive ordinary salaries, and that if they do get a bonus it is of a modest amount to which no one would object.

Indeed, we all value the employment created by our financial services industry, but there is a broader problem, which we all know. In recent years we will have all met businesses that cannot find the funding that they need to keep going or, in some cases, to expand, grow and employ people. Sometimes that is because the price of credit rises so much that the business in question cannot afford it, but sometimes it is because the credit is not available on any terms.

No Government can second-guess every individual lending decision, but there is no doubt that access to finance has become a barrier to the creation of employment. This Government’s answer was to get together with the banks in the Merlin agreement, which was based on gross lending, not net. Let me give the House one politician’s verdict on such agreements. He said:

“This would be completely letting the banks off the hook. It’s perfectly possible for banks to achieve a gross lending target while withdrawing capital from small to medium-sized businesses.”

He went on to say that, in agreeing to gross lending targets, the previous Government allowed the banks to run rings around them. I am of course quoting the current Business Secretary, who had that opinion on gross lending agreements before he came into office—and then supported exactly the same thing.

The right hon. Gentleman subsequently pirouetted and said that the Merlin project had not worked, telling the House last month:

“The Merlin project certainly did not succeed in its central objective, which was to achieve growth in gross lending by banks.”—[Official Report, 8 December 2011; Vol. 537, c. 397.]

The banks’ argument is that they are under conflicting pressure both to increase the amount of capital that they hold and to lend more to business. They tell the public and they tell us politicians that we can have either safe and secure banks or more lending, but not both; and that brings us back to bonuses.

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The hon. Member for Bury St Edmunds (Mr Ruffley), who is no longer in his place, referred to the evidence, given last week to the Treasury Committee by the new regulatory body responsible for financial stability, which suggested that that was not the case at all.

Meg Hillier:
Does my right hon. Friend wish to comment on the sudden enthusiasm of Conservative Members for regulation, given that, when regulation was proposed by the previous Government, they were not keen on it at all?

Mr McFadden:
There are many quotations from Conservative Members calling for less regulation during the previous Government’s period in office, but I refer to the Treasury Committee evidence from Mr Robert Jenkins, a former Credit Suisse trader who is now a member of the Bank of England’s Financial Policy Committee. He recently made a speech in which he said:

“The truth is that banks can strengthen their balance sheets without harming the economy. They can do so by cutting bonuses, by curtailing intra-financial risk-taking and by raising term debt and equity.”

As the hon. Member for Bury St Edmunds said, last week Mr Jenkins told the Select Committee that if the banks reduced the bonus pot by £1 billion, that would make available £20 billion more for small businesses.

This weekend, the banks hit back at that estimate. TheSunday Times was briefed, by an industry insider who clearly has a thing or two to learn about rapid rebuttal, that the real figure if bonuses were cut would not be £20 billion but only £13.5 billion. That argument is based on whether we apply the capital and regulatory rules that exist at the moment or those that may come in future. But whether the figure is £13.5 billion in future or £20 billion at the moment, the argument is clear: reward is an issue not only about fairness, but about the function that we want the banks to have in the economy.

Of course it is galling for a nurse on a pay freeze to be paying for a crisis that they did not cause and then to see a seven-figure bonus, but it is more than galling—the truth is that we have been presented with a false choice between restoring the capital position of banks and supporting lending in the economy. There is not an automatic trade-off between levels of safety and levels of funding once we take into account issues of reward at the top. Put simply, less money in excessive pay at the top would make more available for the lending we need to create jobs. That is why youth unemployment and bank bonuses are linked.

I have one final thing to say. In the coming days, we are going to hear a lot about what top bankers are entitled to contractually; no doubt that argument will be wielded by Ministers. However, contracts are not the only thing that matters. Context matters too, and the context is the greatest squeeze on family living standards since the war. That should be taken into account by the bankers themselves as we decide on restraint on bonuses.

The banking industry is hugely important to this country, but its relationship with the public has been broken. It is time to repair that relationship, and there is no better place to start doing that than in striking a better balance between reward at the top and the job that we want the banks to do—to lend in the real economy.

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8.47 pm

Stephen Williams (Bristol West) (LD):
The motion links the issue of bankers’ bonuses and youth unemployment. With my constituents in Bristol West, I agree that the levels of both are currently excessive.

I shall deal with bonuses first. Executive pay is meant to be the reward for company growth and shareholder return. Over the past decade, executive pay has gone up by an average of 13.6% each year, but the growth in the index of the top 100 companies on the London stock exchange has gone up by only 1.7% each year. Executive pay has vastly outstripped the underlying growth in the companies over which the directors have presided.

Bonuses, of course, are usually the worst manifestation of spectacular reward—sometimes for just modest return for the company’s shareholders, or even a paltry return. Even worse, they can be a pay-off for corporate failure. Today my right hon. Friend the Secretary of State for Business, Innovation and Skills announced the Government’s action to deal with that excess in the boardroom. The boardroom is the place where that excessive behaviour should be tackled and reined in, and shareholders need to take action in shareholder meetings.

The coalition Government will implement or consult on 10 of the recommendations of the High Pay Commission. Taxes, of course, have a role to play, but it is a subsidiary one. The behaviour itself needs to change. Under the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), the bonus tax was a failure according to the terms that he used to describe it when he announced it in the Budget. It was meant to curtail behaviour in the boardrooms of banks, but it failed completely.

At that time, the underlying rate of income tax and national insurance on the recipients of bonuses was 41%; under the coalition Government, the figure is 52%. When we factor in employers’ national insurance, we see that roughly two thirds of the value of a bonus comes back to the Treasury. In addition, the permanent bank levy will raise £2.6 billion for each subsequent year of this Parliament, which is more in net terms than the bonus tax raised under the Labour Government.

The previous Government were, of course, in office for 13 years. They had ample opportunity to do something. I sat through five Queen’s Speeches, in each of which a raft of legislation was announced by Her Majesty, but not once did I hear of an attempt to tackle corporate greed. Indeed, I would say that the Labour Government, certainly for their first eight years, positively encouraged corporate greed. We just heard from the right hon. Member for Wolverhampton South East (Mr McFadden). The Cabinet Minister to whom he reported in the latter years of the Labour Government, Lord Mandelson, said famously that he and new Labour were

“intensely relaxed about people getting filthy rich”.

It was the Labour Government who gave a knighthood to Mr Goodwin.

Mr McFadden:
I have heard that quotation twice today and I think that it is time to complete it. Lord Mandelson went on to say,

“as long as people pay their taxes”.

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Stephen Williams:
That makes it all right, does it? Is it okay to encourage the culture of corporate greed and excessive behaviour as long as people pay their taxes? Of course, the former Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), reduced the rate of income tax that those people were paying. All that Labour promised for shareholders was an advisory role to rein in such behaviour, whereas the Government have today announced binding votes for shareholders so that they have some control over the executives who are supposed to report to them for the value of their companies.

Youth unemployment needs to be set in the overall context of unemployment in the United Kingdom and in other developed economies. The overall unemployment rate in the United Kingdom is 8.2% of the work force. In the United States it is 9.1% and in the eurozone it is 10.1%. In many eurozone states, the rate is much higher than the average. Youth unemployment tends to follow the same trend. It tends to be roughly double the rate in each country. What is happening in this country is not unique among our main competitors.

Youth unemployment is also not a new problem. At least the right hon. Member for South Shields (David Miliband), who was with us earlier, has had the grace to acknowledge that under the Labour Government youth unemployment rose, even during times of strong economic growth and the longest sustained boom since the second world war. In the more than 20 years since 1992, the rate of youth unemployment among 16 and 17-year-olds has remained stubbornly flat and has barely changed, whatever the underlying economic conditions. [Interruption.] The hon. Member for Edinburgh East (Sheila Gilmore) is shaking her head. I suggest that she looks at the Library’s statistics on this matter, specifically for 16 and 17-year-olds.

Sheila Gilmore:
In the early years of the Labour Government, did not youth unemployment fall far below the level inherited from the previous Conservative Government because measures were taken?

Stephen Williams:
Before the hon. Lady intervened, I repeated that I was talking specifically about 16 and 17-year-olds. The Library’s youth unemployment statistics show that from 1992 to the current year the rate of youth unemployment has remained stubbornly at about 200,000, whatever the underlying economic conditions. For 16 to 24-year-olds, the broader group, the unemployment figure did not fall below 600,000, even at the height of the boom.

Sheila Gilmorerose—

Stephen Williams:
I will not give way again because the time would count against me.

Youth unemployment is a long-term problem and we need long-term reform to tackle it. That is why the coalition Government are right to introduce the pupil premium, which will enable young people from disadvantaged backgrounds who are on free school meals, as I was, to get a leg-up in life. It is right that the coalition Government are embarked on a programme of welfare reform. We already have in place the Work programme, which offers assistance to people who are unemployed after nine months or, for 18-year-olds, after six months. It is right

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that we are raising the threshold at which people start to pay income tax. It is when people enter the jobs market for the first time that they are likely to be on the minimum wage or on low average earnings if they are working part time. The rise in the income tax threshold will disproportionately affect young people who are entering the labour market. It is also right that the coalition Government are massively expanding the number of apprenticeships. However, we also need short-term help for people who, through no fault of their own, find themselves unemployed because of the economic circumstances. I am therefore pleased that my right hon. Friend the Deputy Prime Minister has announced the youth contract, which will start in April, with 410,000 places over the rest of this Parliament, 160,000 of which will be wage subsidies of £275 per new job created.

What will help the young unemployed most is economic stability and recovery, together with the confidence that this coalition Government are putting in place the policies to deliver those two things. The low rate of interest that we currently have helps not only households but businesses that are seeking to expand. The Government have a clear focus on stable finances and growth. We should contrast that with Labour’s somersaults, U-turns and ever-elastic bonus tax, which has no credibility as it seems to have funded every single promise that the party has made since the general election.

As the hon. Member for Wigan (Lisa Nandy) said, unemployment is a tragedy for every young person who has experienced it. I grew up in a community scarred by youth unemployment. I witnessed it among my friends—I even experienced it myself at one point in my career—and I do not want another generation to be blighted by it. The Government are taking action, and credibility is a key part of that.

8.56 pm

Mr Michael Meacher (Oldham West and Royton) (Lab):
If I said that the Chief Secretary’s defence of the Government’s position was unconvincing, that would be generous.

I want to focus on bank bonuses and the impact that they have on the economy, particularly on youth unemployment. It is striking that this year the pig-fattening season in the City—otherwise known as bonus time—happens to coincide not only with unemployment among young people exceeding 1 million but with the rest of the population being informed, through research undertaken by Resolution Foundation, that the pay freeze is now expected to last until 2020. Last year the squeezed middle, which represents about a third of the population, suffered a big 4.2% real-terms fall in their incomes; now they are being told that by 2020 they will have £1,700 a year, or about £33 a week, less than they had in 2007—an 8% drop even before inflation kicks in. On the other hand, the City’s 1,200 code staff—the people who take and manage risk—will this year take home, on average, about £1.8 million. That is £34,500 a week or, to put it another way, 78 times the average wage.

Of course, those people are the elite—the risk takers. It is not a bad reward for those who took and managed risk so skilfully until 2008 that as a result, a gargantuan bail-out was required that has cost this country and the Government £70 billion, and torn a hole in the Government budget amounting to 8.5% of GDP, £120 billion. That

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is the difference between the deficit before the crash and 11.6%, which was the figure afterwards, and it is still projected to lead in 2013-14 to a national debt of about £1.4 trillion—slightly more than the nation’s entire income. That is not a bad achievement for just over 1,000 people. It is a pretty good thing that there were not a million of them, as that would have bankrupted the economy totally.

What makes this greed—and that it is what it is—so unconscionable is that it is so unrepentant. There has not been a shred of remorse or apology for what has been done to the country; indeed, it has been quite the opposite, with an arrogant decision that we should return to business as usual as though nothing has happened. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) rightly said, the banks have not even fulfilled the very modest requirements of them under Merlin to increase lending to businesses and home owners and contribute to the creation of jobs, especially for young people. Indeed, the opposite has happened. Lending to business has actually declined because of the degree of deleveraging, and the number of jobs going to young people has also declined, leading, of course, to a disastrous increase in unemployment.

The truth is that the bankers do not seem to get it. There is public outrage that a banking system that owes its continued existence to massive Government intervention can still pay itself mega increases in salary and bonuses, and that in an age of austerity 90% of investment bank profits are directed not at strengthening balance sheets, at shareholders’ dividends, at lowering costs to customers or at creating jobs for young people, but at a gigantic personal pay-off.

I simply ask this: what is the justification for bankers’ bonuses? Bonuses were what caused the reckless stampede into derivatives, securitisation and other new-fangled financial instruments that it turned out all those clever chaps in the City did not even understand. Even now, they still do not want to put their money into what the nation really needs, which is jobs for young people—that is what the debate is all about—and a massive revival of manufacturing industry. In 2010 the UK deficit on traded goods was a staggering £100 billion, which is the worst by far that this country has ever suffered, and 2011 is likely to be much the same, or possibly worse. That is unsustainable, and dealing with it should be our No. 1 priority.

Mark Tami (Alyn and Deeside) (Lab):
My right hon. Friend is making a powerful case. Does he agree that the other problem is that bankers are still obsessed with the short term? That is why they are not investing in such things as manufacturing. They are still obsessed with the short-term measures that deliver them large-scale bonuses.

Mr Meacher:
My hon. Friend makes a very important point. As I am sure everyone in the House realises, there is far too much short-term instinct, particularly in the City. What we need, and have not had, is the relational banking that exists in the mittelstand in Germany. Banks there spend a lot of time, effort and money producing a long-term relationship with manufacturing units that they can support. That is the type of model that we need in this country, but it is not what we have got.

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The banks continue to put their money overwhelmingly into property, mortgages, offshore speculation and tax havens, all for their own enrichment, and stuff the rest of the economy and jobs for young people. I am putting it strongly, but there is huge bitterness outside, as one can see from the August riots, from the Occupy movement and from many other instances of anger beginning to bubble up.

Esther McVey:
Will the right hon. Gentleman give way?

Mr Meacher:
No, I will not give way now.

Bankers’ bonuses have already nearly proved the ruination of this country. What we need is a smaller banking sector that serves the real needs of this country, and particularly of its young people, if we are to avoid a lost generation. Saying no to bonuses, or at least taxing them, is certainly the right way to start.

9.3 pm

John Glen (Salisbury) (Con):
I am grateful for the opportunity to participate in the debate. I would like to make three points, but before I do I wish to put on record my grave concern about the issue of youth unemployment. It is most regrettable that when we have debates such as this, Opposition Members seek to label Government Members as being glib and unconcerned about the plight of their constituents who are in real difficulty.

I was put here by the people of Salisbury, and in my constituency 340 young people between the ages of 16 and 24 are unemployed. I readily concede that that number is significantly higher than it was in the previous year, but I do not accept the comments of the hon. Member for Walsall North (Mr Winnick), who is no longer in his place, that somehow my colleagues and I do not care. I am not complacent about the matter or unwilling to acknowledge the grave seriousness of the problem of youth unemployment, nor am I unwilling to listen to suggestions from Members of all parties of how to tackle it effectively.

I do not see the point of belabouring the fact that the trend from 2004 was in the wrong direction, or that there were 279,000 more unemployed young people when we came to power than there were in 1997. As the right hon. Member for South Shields (David Miliband) said, that trend started in 2004, well before any global banking crisis. Let us therefore be honest in the debate about the nature of the problem and how long we have faced it.

However, we must realise that we owe it to those young people to find a lasting and effective solution. The Opposition suggest that the Government’s cuts and tax increases have choked the economy, that our welfare-to-work programmes are failing and that borrowing has increased, so that the solution, very simply, is to tax bankers’ bonuses and introduce a permanent bank levy. That is supposed to sort everything out overnight.

I have three concerns about that. Fundamentally, I am worried about the economic literacy of such a proposal. One cannot just buy jobs. That logic led to the current ruinous situation. It is misguided on several levels. The Government are doing things to address the points that the right hon. Member for Oldham West

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and Royton (Mr Meacher) legitimately highlighted: the grave frustration and anger about bankers’ bonuses. However, the banking levy that the Government introduced, which was effective from January 2011, will yield more than the one-off policy on bankers’ bonuses in the last year of the previous Government. That is factually correct.

The Government will take on board the Vickers commission’s conclusions, and reforms to the banking sector will be adopted. However, when the right hon. Member for Wolverhampton South East (Mr McFadden), who is no longer in his place, worked alongside former Prime Minister Tony Blair in No. 10 Downing street, I wonder where the desire to reform the culture and the system of banking bonuses was then. We have all failed to address the creeping callus of immorality in our society.

However, the notion that the Government can somehow just kick-start things and buy a few jobs here and there does not do justice to the macro-economic realities. The financial systems—the markets—will not see more spending as a signal that the Government are serious about tackling the underlying problem of the debt in this country. Interest rates would rise. That would lead to mortgage payments rising and businesses losing confidence in making investments.

Debbie Abrahams (Oldham East and Saddleworth) (Lab):
I am listening carefully to the hon. Gentleman, and I do not want to impugn him or any of his colleagues who are genuinely concerned about, for example, the plight of young people in my constituency. I meet college students who are devastated because of the impact of withdrawing education maintenance allowance and trebling tuition fees, and the fact that 10 people are chasing every job. However, all the evidence shows that some of the measures, such as enterprise zones, that the Government have introduced have no effect. Would the hon. Gentleman like to comment on that?

Mr Deputy Speaker (Mr Lindsay Hoyle):
Order. Can we have short interventions?

John Glen:
The Government have not been complacent. They have made, and are making, relentless attempts to deal with the difficulty—the £1 billion investment in the youth contract, 250,000 work experience places and 440,000 apprenticeships demonstrate Government action. The effect is not immediate; things will not change overnight, or in the next three months. We must be realistic about what it takes to rebalance the economy. However, 20,000 extra apprenticeships with £1,500 attached to each will encourage people in the private sector, including small businesses, to take on new people.

We must recognise that there needs to be long-term fundamental change in our economy. We must pay down the debt, reduce the burden of regulations and develop schemes that incentivise private sector employers to make the leap and invest in our young people. We must recognise the reality that we are in an international scenario, and that simply pressing a few buttons in the Treasury will not deliver immediate outcomes. Reheating the flawed logic and instincts of the late 1970s, which said that we could press those buttons and jobs would appear, is flawed.

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The most senior economic adviser to the former Prime Minister and Member for Sedgefield said in 1997 that the Government whom he served had a golden economic legacy. That is not what this Government had when they took power nearly two years ago. It will therefore take time, but there is no complacency. There is a determination to face up to the underlying economic challenges. Only when we have done that will we have a sustainable basis for dealing with the problem—the deep and desperate problem—of youth unemployment.

9.10 pm

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op):
It is timely that I follow the hon. Member for Salisbury (John Glen), who lamented the increase in youth unemployment in his constituency, which is less than half the 1,305 people aged 24 and under claiming jobseeker’s allowance in my constituency—an increase of 12.5% on the same time last year.

In December 2011, 420 jobs were advertised in jobcentres in Hackney, which equates to around 14 claimants per vacancy. Young people who are just leaving school or college are competing for those jobs against people who have work experience on their CV, which is one reason why I lament some of the changes this Government have introduced—getting that experience is crucial to helping people to get on their career path.

Hackney is a very young borough—around a third of Hackney residents are under the age of 24—which means that youth unemployment is a particularly striking and important issue in my constituency. The percentage of 18 to 24-year-olds who have been unemployed for six months in Hackney is now higher than the national and London averages. In December 2011, 2.1% of young people in Hackney had been unemployed for six months, compared with 1.5% in London and 0.9% nationally. In Hackney, 1.2% young people were unemployed for more than 12 months, compared with 0.5% in London and 0.6% nationally. One of my concerns is that we are seeing a growing trend of longer-term unemployment for young people. They might be small in number, but the trend is in the wrong direction.

It is important that we hear from young people themselves. I have been talking to providers of the Work programme in my constituency that work with some of the hardest-to-reach people. The private companies take the easier-to-place people and give specialist agencies and organisations the harder-to-reach ones. Janet Usoro, the student contact co-ordinator at East London Advanced Technology Training, which is a third sector IT training company for young people based in my constituency, told me of a young man who comes from a troubled background. His mother has mental health issues and his father is unknown to him, and he had difficulties in the past with drugs that resulted in a prison sentence.

This young man decided to get his life back on the straight and narrow and at ELATT has achieved NVQ levels 1 and 2 in IT networking. He is progressing through level 3. He has gained confidence and found new personal self-discipline. He is on the right track, but with his background, his chosen career path will require a record of work experience and extra support, which, I worry, the Work programme is not entirely equipped to give him. I hope the Minister responds to that in his summing up.

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Anthony Harmer, the chief executive of ELATT, tells me of his worries about long-term, sustainable funding for the high-level support work it does with such difficult-to-reach young people.

The Minister of State, Department for Work and Pensions (Chris Grayling):
As the hon. Lady has raised a specific point, may I put it to her that the Work programme providers have complete freedom to do what works to help people into work, including securing work experience places for them? It is my hope that the providers in her area find work experience places precisely for someone such as the young man she describes, even if they have not found work experience through the Government scheme or Jobcentre Plus.

Meg Hillier:
If what the Minister says transpires, I will be a very happy Member of Parliament for Hackney South and Shoreditch, but I am picking up on the ground that that is not happening in the way that it should be. The bulk of the business is going to private providers, for the easier-to-place people, and they are taking the money, but the harder-to-reach people are going to the voluntary providers, which are struggling to make the packages work because their funding is crumbs from the bigger table. There may be a structural issue, which I hope the Minister will watch closely as the programme is rolled out, because we do not yet know about the success of the Work programme. Ministers herald it as a success, yet we have seen no figures or results, for all the reasons that have been well rehearsed. This is an issue that the Minister, if he is serious about his job, needs to monitor.

In my area, the third sector agencies are picking up the harder-to-place young people, after what we might call cherry-picking. However, I am not trying to be political; I am concerned that those young people should get that work. Ian Ashman, the principal of Hackney community college, has similar stories to tell. For example, he has told me about Kevin, a 23-year-old father of two with a baby on the way who had an accident going to work one day and, as a result, lost his job. After 100 job applications, he has not been able to find another job. When it comes to full-time college courses, although the college has a good relationship with the local jobcentre, the employment advisers there do not know enough about what colleges can provide. As the Minister is probably aware, that concern was shared by 44% of colleges in a recent Association of Colleges survey. Full-time courses such as those provided by Hackney community college are not always appropriate for young people such as Kevin, because of the impact on their benefits. Indeed, there is an issue with young people wanting to progress and improve their lives, but often being unable to undertake the extra qualification or study that they need. Where do they go in the meantime? As we have heard, some of the apprenticeships on offer are not really true apprenticeships. I am all for more apprenticeships if they are real apprenticeships, but not if they amount to cheap, unpaid work experience.